For degree students, the value of grants for tuition and course-related expenses for books, supplies and equipment is tax-free.
However, any part of a grant that goes for room, board or incidental expenses is taxable income for the student. Non-degree students are taxed on the full value of any scholarship, including the amount that covers tuition. Amounts received for teaching, research or other services are taxable. It doesn’t matter whether the student is paid in cash or through a tuition-reduction program. For example: If tuition is discounted in exchange for a graduate student serving as a teaching assistant, the amount that's discounted counts as taxable income.
There is a bit of a silver lining: The taxable part of a scholarship or fellowship qualifies as earned income. Therefore, even dependent students can use their standard deduction to offset part of it.
For a discussion of tax-free fringe benefits, please see Tax-free fringe benefits.
All pay for enlisted personnel and non-commissioned officers while serving in a combat zone is tax free. For a commissioned officer, the tax-free amount is capped at the highest enlisted pay, plus any hostile fire or imminent danger pay received.
All tips are taxable. If you receive more than $20 a month from tips, that income is subject to withholding. You report the tips to your employer, who takes them into account when figuring how much to withhold from your wages.
For a discussion of the taxability of tip income, see Tip Income.
There is no additional help for this subject. If you hold a mortgage credit certificate, go through the interview for this topic.